Economical comparison of the two methods of increasing the power supplied

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The power factor of a circuit implies that how efficiently power is being consumed or utilized in the circuit. The greater the power factor of a circuit, greater is the ability of the circuit to utilize apparent power. Thus if the power factor is 0.5, it means that 50% of the power is being utilized. However, it is desired that power factor of a circuit to be as close to unity as possible. The cosine of the angle between voltage and current in an ac circuit is also known as power factor. The Power factor of an alternating circuit is defined as ratio of active power to the apparent power. In an ac circuit, there is generally a phase difference between voltage and current. In an inductive circuit, the current lags behind the applied voltage and the power factor of the circuit is referred to as lagging. In a capacitive circuit the current leads the applied voltage and-therefore, the power factor of the circuit is said to be leading.